GRAND OPENING: RICHMOND THERMO MASTER PLANT
By: PTR
Reply To: None Friday, 21 May 1999 at 9:57 PM EDT
RAGING BULL Post # 1126 of 1143
Grand Opening comments...
I was at the Grand Opening of Richmond Bio Conversion Inc. It stretched from about 11am to 1:30pm and was very impressive. They spent lots of money on this (probably issued a million new shares). About 250 people attended, and were accommodated in a huge tent complete with blue carpets and table-cloth-draped tables. The catering was quite good, but they did not have drinking water (perhaps to avoid noisy ice cubes while speakers were speaking). There were red carpets outside, leading into the tent and into the Thermo Master Mark III Plant. Every guest was given a white 'ttti' hard-hat for the mass plant tour afterwards. Maybe we could have kept the hard-hats, but I returned mine as I left.
The plant was much spiffier since last I saw it. New sod, even planted and potted flowers here and there. Canuck, USA, BC, & TTTI flags out front on poles above the RTO. A huge new 'ttti Richmond Bio Conversion' sign on the outside of the building. The even had a bathroom facilities trailer on site, temporarily I believe. Parking was no problem, much to my surprise, since the adjacent junk yard has disappeared, leaving an unpaved parking lot that TT was using.
Many speeches were given,
Mr. Wayne Hansen (the CFO?) was emcee, introducing all the other speakers. Some didn't say anything of interest to me. Richmond's mayor said the main road on Mitchell Island will get $2 million of improvements later this year, from the bridge all the way to Richmond Bio's front gate. The crowd cheered! The existing road is bad. All dollar amounts I mention are presumably C$, they never specified.
Mr. Hansen at the start said the plant cost $28 million, all bought with equity financing (yeah we know). There are 20-something employees there.
Mr. Len Remple (a Director) said something about how bad organic waste was for landfills because of decomposition and leachates (run-off water), and how TMP's will divert organic wastes away from landfills, much to everyone's appreciation in the future. (I will here insert a plug for AQE.V, which has a different solution for landfill leachates.)
Mr. Ed Kroeker (pronounced 'Kraker'?) was very long-winded (he is an engineer turned marketing guy). He must have written the handout entitled 'A History of the Thermo Master Mark III Plant', because he read much of it while we started lunch. He was the first speaker to mention that Richmond Bio has been improved/upgraded to 1200 tons/day input capacity.
Mr. Dick explained about the latest innovation, the introduction of separate incoming process flows for liquid wastes (10% or less solids content) vs. more solid waste (over 10% solids content). Solids go the old route, direct into the hydropulper. Incoming liquid waste (maybe solid waste too?) now gets centrifuged and evaporated somewhat to remove water to increase solids content, then it is input to the fermenter stage. The fermenters now work with higher solid contents than before (35% vs 15-20%) which increases throughput of what really counts (protein output). (I am cribbing and paraphrasing from the handout. It all seems reasonably credible from a technical viewpoint.)
The new I/O numbers are something like 1200 tons/day waste goes in (a mix of liquid and solid organic wastes, at various tipping fees). Then about 330(?) tons/day animal feed goes out. I am confused at this point because they also introduce some corn and oats into the output mix to add value and simplify processing (the dry corn and oats absorbs moisture from the processed bio solids, so a drying step is eliminated?). Don't quote me on this. I would like to see a detailed mass balance flowchart for this process. I presume lots of water and steam and carbon dioxide and maybe other gases are thrown out along the way between input and output.
Another engineer, Mr. Karl Gonnsen, took the podium to tell us about the permitting process for plants that no one wants in their own backyard. It can take up to 18 months to get all the necessary permits from multiple levels of government, before construction begins. Then building takes about 6 months (commissioning is extra). Organic waste recycling plants (factories) are a new thing, not familiar to bureaucrats or anyone else (except TTRIF). Up to 25 different approvals are needed for a TMP (Thermo Master Plant).
Now here is something Mr.Gonnsen said that dissident shareholders must consider... Mr.Gonnsen is with a consulting engineering company (Metropolitan Planning & Engineering or something similar, sorry I am too lazy to check the details) that helps get the permits for customers like TTRIF who want to build big things. He said that TTRIF is a 'good client' in the sense that TTRIF does listen to its consultants and act on their advice, to prevent problems with neighbours and governments etc. He says that TTRIF has always opted for the best available control technology for problems like odors, to at least meet and often to beat the requirements for being a good neighbour (again I paraphrase).
Now I think that TTRIF should hire financing consultants to recommend ways to not screw existing shareholders. My overall impression is that the gang at TTRIF means well, but they are only human, and make occasional expensive mistakes while learning by trial and error.
There were many accolades for Rene Branconnier. His team really seems to respect him. Mr. Branconnier himself never said a word to the assembly. He sat at center of the head table up on the stage with about a dozen other VIP's.
There was no evidence of the mythical new managers from Thermo Tech Ventures (TTV), Kevin Simpson etc. I think Mr.Hansen at some point mentioned that negotiations were still in progress and that appropriate reporting would be done if something transpires.
Mr. Kroeker spoke again, using a large display board to try to explain the Thermo Master Plant process flow. Ross Lewis (another engineer) helped out at another display board at the other end of the huge tent. I was busy eating the nice lunch that was served, so I did not catch all the details (I'm sorry guys, I was busy gobbling up the first dividend I have ever received from my sad TTRIF investment.)
At one point Mr. Hansen reminded us that we were eating lunch right outside the receiving area of an organic waste recycling facility. The air was noticeably stinky, but not intolerably so, shortly before lunch was served. Also it was windy outside; the tent fabric was rippling then. During lunch the stink was almost unnoticeable and I did not notice any wind. I think waste receiving operations were suspended for most of the day (I saw zero trucks), so we did not sample the air on a normal day.
I appreciated my lunch of salad, rolls, sliced beef, chicken, and cheese. I earlier had 2 danishes, and later had lots of desert (cakes and brownies). Altogether just for me it probably cost around C$10, or 70 new shares, not counting the excellent catering service.
Director Dr. Owen Anderson took a turn at the podium, hyping all the international marketing efforts. Some 25 countries are interested in the process. China even paid the expenses of a briefing/sales team from TTRIF. Apparently lots of countries (in Asia especially) are drowning in waste and also must import lots of expensive animal feed. Sounded good to me.
I did not hear why there are not yet any international sales, given all this interest. I did catch some hints that everyone is waiting to see if the TMP really works as advertised. The recipe certainly changes often enough. Also, Rene and TTRIF want to get it right before building too much. (I can't reconcile these impressions with previous announcements I have heard that there will be 5 TMPs before the end of 1998). I guess all the customers want a TMP, but don't want to pay the capital cost for a still-risky process.
Mr. Hansen wrapped up the podium speeches with some financial mumbo jumbo that aggravated me. He uses an expression something like "profit before expenses", or "operating profit before depreciation, amortization, taxes, salaries, whatever" (not direct quotes). I never heard any bottom-line guestimates for net pocketable earnings of interest to fleeced shareholders.
I might have heard that Richmond (as a Mark III TMP) should collect revenues around $24 million (presume C$), with operating profit around $17 million before expenses(?!). Call Investor Relations? The output product (enhanced with corn and oats) now sells for around $200 per ton. I don't know how much they pay for how much corn and oats. They try to make it sound good, but I never heard any sufficiently complete financial picture so I continue to be suspicious/skeptical because of past events, disappointing financial statements, US$0.10 share price, over 230 million shares out, etc. THIS IS STILL A HIGH RISK DEVELOPMENT-STAGE PENNY STOCK GAMBLE!!
Like, it is still not clear where capital will come from to build the next plant. If Richmond really is a good plant, they might have to run it a couple years to prove it, in my opinion.
Mr. Hansen says TTRIF expects to be cash-flow positive by mid-July.
I am leery of the term 'cash flow', because shareholders can be still losing money even when cash flow is positive.
Then we all went outside the tent to see Rene do the ribbon cutting in front of receiving bay door #2. I did not get a good view (lots of people). It was quick and quiet. The door opened and we all flowed inside to see. Big receiving bay (3 doors for 3 big trucks, but there were none there today). I do not recall any objectional smells. The floor was clean concrete but looked like it had seen some industrial action. Lots of ductwork and pipes and conduits and very large vertical cylindrical tanks. Very industrial scale recycling.
One of the 6 big tanks was leaking brown-grey goop from way up near the top, trickling down the outside. I backed away just in case it was going to start leaking more vigorously. Lots of motors and control panels and pipes and conduits and cables all over. Some places were quite clean, other places were dusty dirty or slimy.
Off in one corner was a few tons (several cubic meters) of melon rinds. Eventually someone got into a bobcat-style front-end loader and started scooping up melon rinds and dumping them into the hydropulpers. We could not see into the hydropulpers from where we stood. The bobcat operator was really skilled, almost a maniac, but he never crashed into anything and was really good at spinning tires on the melon-juice-wetted floor.
As he dumped melon rinds into the pulpers, occasionally steam would drift up. The TMP is quite noisy inside and out, not good for conversation in groups.
Eventually we all drifted outside again, then into the other end of the plant at the shipping bay door. There was a smell of animal feed here, like in my uncle's dairy barn. Even noisier here. Lots of little and big electric motors driving pumps and fans and conveyer belts and maybe augers and other material-handling machines.
The shipping area was very dense with machinery and pipes and ductwork and ladders and catwalks. Lots of control buttons and gauges and different-colored piping all over. Some pipes looked like stainless steel and were nicely welded at every joint. The biggest motor I saw looked about 300 horsepower (bigger than a loveseat), the smallest motor was under 1 foot long. Lots of motors everywhere. Safety equipment was all over (fire extinguishers, eye wash station, emergency shower). One warning sign said something about 'caustic', another said 'high pressure'. Not a good place for kids to run around. The workers (I only saw 2) wore coveralls and hardhats. I think they were there to keep curious guests away from the control panels and moving parts.
In the background were medium-sized blue-painted tanks that might be insulated. I did not sense any thermophilic heat anywhere. There were smaller tanks and hoppers in other places.
A small conveyer belt was carrying feed pellets past us, perhaps a few pounds per second. The feed pellets looked similar to the brown-grey-greenish goo I had seen earlier leaking from the tank, but pelletized and drier (but not dusty). We walked underneath 5 large funnels for dumping feed into a truck. There was a pound or two of ground-up feed pellets on one red carpet under one funnel.
Overall, the plant looks like it means business. These guys don't mess around with little toys.
Outside in front by the road is the odor-control RTO (Regenerative Thermal Oxidizer?). Very big ductwork and steel chambers, feeding ultimately into the tall stack from which hot gas could barely be seen rising into the sky.
I could readily imagine C$28 million going into this TMP's construction. There was lots we could not see, I presume.
My final comments re: Grand Opening...
After I got home, my pants and jacket still smelled bad like the Richmond Bio plant.
If you ever go to a TMP Grand Opening, wear clothes that are easy to wash.
The Plant smell on the outside was not intolerable, the one non-routine day I was there. But there is definitely a bad smell sometimes. If it is no worse in normal operation then it might be accepted by the neighbours (some other facilities on Mitchell Island are also not very sweet smelling). Other areas in Greater Vancouver have their own odor problems. A landfill would be a lot worse. Some back-alley dumpsters in my neighbourhood sometimes smell way too ripe.
Now I am just thinking out loud...
As an investor I am still unhappy with the murky financial information meted out by TTRIF. If I felt I could trust them, it would not be a big problem. But past events have ruined managements' credibility. I am sure most of the people working on the Thermo Tech dream are competent and honest, but human foibles (eg. over-optimism) could easily obscure crucial facts that reveal whether or not this is a good bet for investors. Plus, the project is simply too big and complicated for anyone to be able to predict success. It is a learning experience with economic risks and potential (not guaranteed) rewards.
If TMP's really can be operated with good profit margins (after deducting ALL expenses), then this is an investor's dream, because the world could use hundreds, maybe thousands of these plants. And the market capitalization of the whole TTRIF company is only about US$25 million today, so the shares would seem to be a bargain.
But if TMP's are not profitable, then this becomes just another save-the-environment charity. A noble cause, certainly, but not one that you would want to put too much of your own money into.
For anyone thinking of getting into this stock, I advise caution. Think of it as a charity; don't donate too much, you will probably lose it all. If things finally go well for TTRIF, then you will go to heaven. But don't count on it. There is simply no credible good track record for outsiders to extrapolate from. This is still a very speculative situation, suitable for gamblers who can afford to lose, not for investors who can't. If (IF!) TTRIF turns the corner into consistent profitability, it could be a long-term growth stock, and then you will have lots of opportunity to invest later at safer risk levels.
I admire the work of all the scientists and engineers and trades who put Richmond Bio Conversion together. It is an impressive facility.
I wish and hope that eventually the economics will similarly become plainly impressive so that I can salute the risk-taking entrepreneurs, business people, and shareholders who also made the project happen. On second thought, I salute you right now, because someone has to take the risks that lead to progress, even if occasional failure is the result. Just don't be so bloody optimistic unless you have solid facts to back you up.
I guess it is important to know one's risk tolerance, and to not underestimate the risks. TTRIF is a penny stock now because it is still risky. It took a while for the market (and me) to figure out this reality. But the story is still evolving, smart people are working on the problems, improving the recipe, testing it. If TTRIF does not go bankrupt first, we shareholders might eventually be holding a winner.
The displeasure with which many people regard Rene Branconnier is I believe the result of interacting human foibles rather than anyone's outright malice. A complicated situation simply got out of control. It is still out of control. Everyone should analyse their own contribution to the mess, and figure out an appropriate clean-up. The productivity of our enterprise is at stake.
End of long-winded comments.
(Cross-post as you wish; I'm not going to.)
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